Question
Because fair market value information is not readily available, if a loss seems likely, an estimate of fair value must be calculated. This does invite
Because fair market value information is not readily available, if a loss seems likely, an estimate of fair value must be calculated. This does invite earnings and loss manipulations. If the controlling company had significant influence, managers of the controlling company could increase the income of the controlling company by transferring large dividends from the controlled company regardless of the income or performance of the controlled company, increasing their compensation.
What do you think about this statement? Do you agree or disagree?
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